Germany: The HartzPlus experiment is starting, and the basic income discussion is there to stay

Germany: The HartzPlus experiment is starting, and the basic income discussion is there to stay

Anna, 29 – Participant in the HartzPlus experiment in Berlin, Germany

The HartzPlus experiment is starting in Germany this month. Previously summarized, the experiment will involve 250 welfare beneficiaries, subject to the Hartz IV welfare scheme. For three years, the randomly selected participants will receive 416 €/month, whether they comply with the Hartz IV conditions or not. For comparison purposes, the minimum wage in Germany is around 1500 €/month, and the poverty line stands at approximately 1100 €/month. So, just like the recent experiment in Finland, this is an test which on objective terms cannot be said to be reproducing a “basic” income, in the sense of providing the basic for achieving a minimum dignified standard of living (in this case, in Germany). Like in Finland, it is mainly testing the effects of introducing an unconditional element on the income of a group of people, for a limited period of time.

Other propositions have been vocalized in Germany, mainly in response or even as an expression of protest against the Hartz IV, enforced in the country since 2003. One of such voices has been Berlin Mayor Michael Müller, a long time Social Democratic Party (SPD) official. However, what Müller is defending, in essence, is a job guarantee, over a basic income. Beneath the “basic income based on solidarity” concept lies a fundamental distrust in Berlin’s citizens: that the latter must be coerced into municipal or social service jobs, in exchange for their “basic income” (a gross amount or around 1500 €/month). However, the proposition has been popular in Germany for a long time, with the Social Democratic Party and the Left Party having subsidized public employment in Berlin between 2002 and 2011.

While politicians and voter’s stomach for Hartz IV is running dry, after more than 15 years of enforcement, clear justification for a UBI kind of policy still seems to be lacking on the public arena. For instance, funding a basic income is still publicly presented as value of basic income times number of recipients which, of course, leads to prohibitive costs. This comes at a time when ever more studies demonstrate that providing a basic income to citizens can cost much less than that to the State on a net basis, or it can even be calibrated in such a way as to be cost neutral (by applying changes to social security schemes and taxation).

Hilmar Schneider, an economist for the IZA Institute of Labor Economics, actually thinks that creating a financial floor for poor people means spending money on all the population. Internally, he is also thinking in a “value of basic income times number of recipients” mentality, not understanding the income transfer mechanism inherent in basic income implementation. According to him, present day low paid jobs will become less attractive, which sounds reasonable to assume, since most people only accept those jobs because they are permanently threatened with destitution. What might not be so reasonable to assume, however, is to think that it may lead to price increases, and a general downward trend in income for many people. If people can accumulate a basic income with whatever income they can get from paid work, within a properly setup tax structure which incorporates basic income at its core, a rise in poverty is surely questionable.

More information at:

David Martin, “Berlin mayor calls for basic income in Germany – or does he?”, DW, March 20th 2018

Arthur Sullivan, “Germany’s “money for nothing” experiment raises basic income questions”, DW, 28th February 2019

André Coelho, “Germany: The first basic income experiment in Germany will start in 2019”, Basic Income News, 16th December 2018

When a few drops of rain allow flowers to blossom: Finland’s basic income experiment generates its preliminary results

When a few drops of rain allow flowers to blossom: Finland’s basic income experiment generates its preliminary results

Picture credit to: Finland Toolbox

Finland’s famous “basic income experiment” is now over. The analysis program is being rolled out, and was scheduled according to the following timetable (from Kela (Finnish Social Services)).

 

At the end of 2018, a phone survey was made, involving all participants (2000 experiment subjects and 5000 people forming the control group), to check on “the impact of the basic income on employment, taxable earnings, take-up of unemployment benefits paid out by Kela, and enrolment in employment services”. This survey was done according to international standards on questionnaires (e.g.: European Social Survey, International Social Survey Programme, European Union Survey). Furthermore, interviews are planned to be performed in early 2019, in order to “interpret and shed further light on some of the unanswered questions and unexpected results”. To contextualize the registry data collection, phone survey and interviews, a thorough look will also be directed to public debate and popular support (or lack thereof) for basic income. This clearly means that the investigators did more than just try to answer the overarching question posed by the Finnish government at the start of the experiment: “could basic income increase employment and simplify the social security system?” (video)

 

Now that the experiment is over, and while the data treatment and deep analysis is being performed, BBC put together a short video piece entitled “Did Finland’s basic income experiment work?”, asking the corollary inquiry “How free money changed people’s lives?”. In a couple of interviews with experiment participants, the message coming through is that the experiment brought promises of a better, more secure life, with less governmental bureaucracy, but unfortunately it had to end (with no prospects of expansion, let alone implementation by the current government). One of those participants, Tania, told BBC that “basic income changed my life”, since it allowed her to “stand on [her own] two feet”. Another participant, Thomas, referred that the same difficulties remained, during the experiment, for getting into paid employment, which might be related to the fact that the experiment had a very small target group of people (2000), spread along the whole of Finland. That level of scattering doesn’t allow for community effects on the introduction of a kind of basic income allowance, and so the marketplace does not adjust accordingly. This seems to be aligned with one of the preliminary conclusions just published: that the experiment did not result in higher levels of paid employment for the participants.

 

However, the referred published report does include important (preliminary) results of other (less objective than hours in employment) analysed variables, such as Life Satisfaction, Trust, Confidence, Physical and Mental Health, Concentration, Depression, Financial Security, Stress and Attitudes Toward unconditional basic income (UBI). International basic income activist Scott Santens has summarized these results in a convenient way, which might be put into an even more succinct list (percentages refer to differences between averages of the experiment’s treatment group and the control group, over each variable):

 

Life Satisfaction – observed an 8% improvement;

Trust – observed an increase of 6% in other people, 5% in the legal system and 11% in politicians;

Confidence – observed an increase of 21% of confidence in one’s future, and a 22% increase in one’s ability to influence society;

Physical and Mental Health – observed a 17% improvement;

Concentration – observed a 16% improvement;

Depression – observed a 37% reduction (measured through qualitative answers);

Financial security – observed a 26% improvement;

Stress – observed a 17% improvement (over the number of people who responded they felt “little or no stress at all”);

Attitudes Toward UBI – observed a 38% improvement over the number of people who strongly agree that a nationwide UBI would make it easier to accept job offers, and a 24% increase over the number of people who think Finland should now adopt a UBI.

It should be made clear again, if two years of the pilot itself and another of preparation were not enough to explain the real important parameters of the experiment, that what happened in Finland was not exactly a basic income (implementation) experiment. It was, as Santens put it, “a test of slightly reducing the marginal tax rates experienced by the unemployed, and also slightly reducing the amount of bureaucracy they experience”. From this to a basic income as defined by BIEN goes a long way. Nevertheless, it is remarkable that such a limited experiment, both in scope as in depth, could generate such positive preliminary results on human (generalized) wellbeing.

More information at:

Toru Yamamori, “Finland: Wellbeing improved: First results of the BI experiment”, Basic Income News, February 11th 2019

Olli Kangas, Signe Jauhiainen, Miska Simanainen, Minna Ylikännö (eds.), “The Basic Income Experiment 2017–2018 in Finland. Preliminary results”, Ministry of Social Affairs and Health, February 8th 2019

Scott Santens, “What is There to Learn From Finland’s Basic Income Experiment? Did It Succeed or Fail?”, Medium, February 14th 2019

Ukraine: Another basic income experiment is being developed in Ukraine

Ukraine: Another basic income experiment is being developed in Ukraine

Picture, from left to right: Artem Demidenko (sociologist, psychologist), Nataliya Protasova (Board Chair of Basic Income Ukraine organization), Artem Kuharenko (Podolsk village council), Kateryna Drei (Head of Basic Income Ukraine organization)

After Pavlograd, there is another basic income experiment being assembled in Ukraine. This time it was announced, on the 15th of December 2018, by Artem Kuharenko, the head of the Podolskoe village council, in the Cherkasy region. Along with Natalya Protasova, who chairs the Board of the Basic Income social organization in Ukraine, Kuharenko informed that the pilot will involve all of the village’s inhabitants (550), over a two-year period.

This basic income experiment will disburse a regular, unconditional cash transfer of 200 €/month to all Podolskoe villagers. Funds are being collected, from budget surpluses and crowdfunding. Kuharenko, the youngest village mayor in the country, with only 25 years of age, aims to raise his village’ inhabitants standard of living, increase the attractiveness of rural life and bring in more people, especially young ones.

There is no information, at the moment, about how the experiment is to be conducted, namely if there will be a control group (e.g.: another village), or how recipients will be monitored (e.g.: measurements of income, social activity, health, work load, etc.).

More information at:

André Coelho, “Ukraine: Basic income experiment has started being prepared in Ukraine”, Basic Income News, December 12th 2018

Euromaidan Press, “Youngest mayor in Ukraine gives village a second life”, 20th May 2017

Ukraine: Basic income experiment has started being prepared in Ukraine

Ukraine: Basic income experiment has started being prepared in Ukraine

The City of Pavlograd, in Ukraine, has decided to perform a basic income experiment, in order to measure the effect (on the individual level) of unconditional cash transfers on the labor market, objective and subjective well-being, financial health, changes in mental and physical health, among other social indicators. This decision was made on the 29th of November 2018, the day when the Head of the City, Mr. V. Movchan, proclaimed: “The city administration is interested and supports the proposal of the social organization “Basic income” (Ukraine) on the joint implementation in [the] city [of] Pavlograd a pilot project for the introduction of basic income, the purpose of which is to ensure a decent standard of living for the city’s residents”.

 

The experiment is presently in the beginning of its preparation phase. A working group is being assembled, comprising elements from Pavlograd executive bodies, social society, sociologists from several countries, public organizations and researchers. The plan, for the experiment, is to disburse the equivalent to a 100 €/month to each of the 2000 randomly selected Pavlograd adult citizens (the average monthly salary in Ukraine is around 9000 UAH, or 286 €), for a 24-month period.

 

City officials have communicated that the City is not yet capable of contributing to the experiment’s financing, but will cover the immediate costs of communications and announcements, physical work spaces and guaranteeing crucial human resources to start the experiment assemblage. For now, the money for the cash transfers themselves is being considered as a fund-raising initiative among public and private charitable organizations in Ukraine, as well as foreign organizations.

 

 

More information at:

In Ukrainian:

У якості експерименту дві тисячі павлоградців посадять на безумовний дохід”, дHIпPOГPAд, November 30th 2018

Switzerland: A basic income experiment is on the verge of starting in Switzerland

Switzerland: A basic income experiment is on the verge of starting in Switzerland

Rebecca Panian

 

The Swiss village of Rheinau is being targeted for a basic income experiment. The idea is being promoted and produced by the Dorf Testet Zukunft organization (Village of the Future Test). It started in 2016, through a popular initiative, and it had already been approved by more than 25% of the Reinhau population, at the time. Although Reinhau is only habited by 1300 people, 813 have already registered for the experiment. That is above what the organization needed for starting funding, which was 651 registrations.

 

The basic income test itself is planned to start as early as 2019, given enough funding is secured, which starts now. The Dorf Testet Zukunft will have to raise over 5 million Swiss Francs (4,4 million Euros). The plan is for this amount to be distributed unconditionally to all registered participants, for a year. The money will be distributed according to age, such that until 18 years old children receive 550 €/month, the 18-22 years old bracket receive 1100 €/month, from 22 to 25 years old 1640 €/month and above that a 2190 €/month stipend is specified. According to the organization, income from other sources will be discounted over the basic income, up to its maximum value. However, no one will be left with less income than presently, and all people with less income than the basic income value will have more than before (during the experiment). The exact and appropriate experimental mechanism and values are in accordance with villagers and the local council, since the project is open to comment and contributions from all involved.

 

Dorf Testet Zukunft’s team is composed by several dedicated people, headed by project initiator and filmmaker Rebecca Panian, Reto Ormos (financial expert) and Reda El Arbi (Communications), among others. There is also a scientific team dedicated to the project, including Jens Martignoni (FleXibles), Aleksandra Gnach (linguistics professor at ZHAW), Theo Wehner (ETH Zurich) and Sascha Liebermann (Alanus Hochschule). Other support come from activists like Daniel Häni, Götz Werner and Enno Schmidt.

 

Funding is planned to be done through a crowdfunding process, using Wemakeit, a crowdfunding platform founded in Switzerland in 2012. Data is to be collected from recipients during its duration, with a focus on answering general questions such as “What happens to the people?” and “What happens in the community?”, and analyzed afterwards. A documentary film is also planned, directed by Rebecca Panian, which main drive is a search for an answer for “how we want to live in the future”.

 

The idea is, in a nutshell, can be condensed in the following words written in the Dorf Testet Zukunft’s website:

 

“We want to test a possible new future as realistic as possible. This requires pioneers who dare and try it out. Best case: we can encourage people to discuss about the idea of the basic income because we are convinced that a system change must come from the people. Not prescribed from a government.”

 

More information at:

Dorf Testet Zukunft website